What is Ethereum? ETH 101: Introduction

Ethereum is a technology that lets you send cryptocurrency to anyone for a small fee. It also powers applications that everyone can use and no one can take down.

It's the world's programmable blockchain.

Ethereum builds on Bitcoin's innovation, with some big differences. Both let you use digital money without payment providers or banks. But Ethereum (ETH) is programmable, so you can also use it for lots of different digital assets – even Bitcoin! This also means Ethereum is for more than payments. It's a marketplace of financial services, games, and apps that can't steal your data or censor you. You can check Ethereum's price in pounds at CoinMarketCap.

What's an Ethereum Wallet?

Ethereum wallets are applications that let you interact with your Ethereum account. Think of it like an Internet banking app – without the bank, your wallet lets you read your balance, send transactions, and connect to applications.

You need a wallet to send funds and manage your ETH.

‍Your wallet is only a tool for managing your Ethereum account. That means you can swap wallet providers at any time. Many wallets also let you manage several Ethereum accounts from one application. That's because wallets don't have custody of your funds, you do. They're just a tool for managing what's really yours.

Wallets, Accounts, and Addresses

It's worth understanding the differences between some key terms. An Ethereum or ETH account is an entity that can send transactions and has a balance. An Ethereum account has an Ethereum address like an inbox has an email address. You can use this to send funds to an account. A wallet is a product that lets you manage your Ethereum account. It allows you to view your account balance, send transactions, and more.

Most wallet products will let you generate an Ethereum account. So you don't need one before you download a wallet.

Types of Wallet

Physical hardware wallets that let you keep your crypto offline – very secure.
Mobile applications that make your funds accessible from anywhere.
Web wallets that let you interact with your account via a web browser.
Desktop applications if you prefer to manage your funds via macOS, Windows, or Linux.

How to stay safe?

Wallets require a bit of a different mindset when it comes to safety. Financial freedom and the ability to access and use funds anywhere come with a bit of responsibility – there’s no customer support in the actual crypto.

Take responsibility for your own funds

Centralized exchanges will link your wallet to a username and password that you can recover in a traditional way. Just remember you’re trusting that exchange with custody over your funds. If that company is attacked or folds, your funds are at risk.

Write down your seed phrase

Wallets will often give you a seed phrase that you must write down somewhere safe. This is the only way you’ll be able to recover your wallet.

Here's an example: there aeroplane curve vent formation doge possible product distinct under spirit lamp.

Don’t store it on a computer

Write it down and keep it safe.

Bookmark your wallet

If you use a web wallet, bookmark the site to protect yourself against any phishing scams.

Triple check everything

Remember transactions can’t be reversed and wallets can’t be easily recovered so take precautions and always be careful.

Decentralized Applications (DApps)

DApps have their backend code (smart contracts) running on a decentralized network and not a centralized server. They use the Ethereum blockchain for data storage and smart contracts for their app logic.

A smart contract is like a set of rules that live on-chain for all to see and run exactly according to those rules. Imagine a vending machine: if you supply it with enough funds and the right selection, you'll get the item you want. And like vending machines, smart contracts can hold funds much like your Ethereum account. This allows code to mediate agreements and transactions.

Once DApps are deployed on the Ethereum network you can't change them. DApps can be decentralized because they are controlled by the logic written into the contract, not by an individual or a company.

Decentralized Finance (DeFi)

DeFi is an open and global financial system built for the internet age – an alternative to a system that's opaque, tightly controlled, and held together by decades-old infrastructure and processes. It gives you control and visibility over your money. It gives you exposure to global markets and alternatives to your local currency or banking options.

DeFi products open up financial services to anyone with an internet connection and they're largely owned and maintained by their users.

So far tens of billions of dollars worth of crypto have flowed through DeFi applications and it's growing every day.

DeFi is a collective term for financial products and services that are accessible to anyone who can use Ethereum – anyone with an Internet connection. With DeFi, the markets are always open and there are no centralized authorities who can block payments or deny you access to anything. Services that were previously slow and at risk of human error are automatic and safer now that they're handled by code that anyone can inspect and scrutinize.

There's a booming crypto economy out there, where you can lend, borrow, long/short, earn interest, and more. Crypto-savvy Argentinians have used DeFi to escape crippling inflation. Companies have started streaming their employees' wages in real-time. Some folks have even taken out and paid off loans worth millions of dollars without the need for any personal identification.

Source of this article: ethereum.org.